Should I use a REALTOR® when purchasing a new construction home?

If you walk into the sales office of a new subdivision and work with the agent sitting at the desk you are talking to the agent who works for the builder…this means that they are working in the best interest of the builder, NOT YOU!

I am not saying that they are going to take advantage of you in any way or that they are being shady, it’s about who they work for. They have an agreement with the builder and they legally represent him. This is why you need an agent to legally represent you and work in your best interest.

If you do walk into the sales office, be sure NOT to sign anything until your REALTOR® is with you. If you sign an agency agreement you could be legally stuck using the builder’s agent.

Step into the shoes of the builder…

A builder looks at the sale of a new home as a math equation; it’s all about the numbers. They know how much per square foot it costs them to build a standard home. They know how much profit they want to make on each home and they have already accounted for REALTOR® costs and most likely closing costs. If you are working with the builder’s agent, any monies left over after these costs will likely be more profit to the builder. However, if you have an agent working for you, they will be able to negotiate with the builder and have that extra money put back into your pocket in the form of upgrades, bonuses or possibly down payment assistance.

If you are working with the builder’s agent, any monies left over after these costs will likely be more profit to the builder. However, if you have an agent working for you, they will be able to negotiate with the builder and have that extra money put back into your pocket in the form of upgrades, bonuses or possibly down payment assistance.

However, if you have an agent working for you, they will be able to negotiate with the builder and have that extra money put back into your pocket in the form of upgrades, bonuses or possibly down payment assistance.

Builders want their homes to move quickly. A construction loan works a little bit like this; the bank gives the builder enough money to begin construction on 4 homes at the same time.

That builder must sell one of those homes before they will give him/her money to start the next home. If he/she sells 2 of those 4, the bank will release funds for the start of the next 2 more homes,

That builder must sell one of those homes before they will give him/her money to start the next home. If he/she sells 2 of those 4, the bank will release funds for the start of the next 2 more homes, etc. If this is in fact how the builder’s financing works, they are willing to make deals. They don’t want construction to halt for any reason.

Builders are more likely to offer you upgrades on your home as opposed to lowering the price of your home. If they lowered prices for everyone in the subdivision they would be bringing the value of that subdivision down as well. They would much rather keep the value of the homes high and compensate you by offering upgrades.

In the end, this benefits you, the builder and the community by maintaining steady housing prices.